Next generation managed services evolve with operator requirements

Telecom Lead

12 years ago

Indian IT services companies have achieved a deserved reputation for IT outsourcing management and systems integration work over the past decade. Interestingly, there has also been a growing trend among Indian based telecommunications network operators to procure outsourced services. This trend can be partly attributed to the increasingly complex telecoms landscape.

A new generation approach to managed services is needed to fully address the contemporary and future requirements of Indian network operators. To achieve success in this climate, Managed Service Providers (MSPs) not only have to be as informed and knowledgeable as their customers, but also have to be fully supportive of their customers’ business objectives. For operators wanting to achieve a competitive edge when introducing new products and services, a managed services approach is increasingly the most cost-effective and agile option.

However customer-supplier relationships are changing as the most successful partnerships are not based solely on KPI measurements and SLAs but instead are based on a joint vision and shared business objectives.

Next-generation managed services provide network operators with a platform on which to expand their business models, respond to innovations, achieve greater margins and realize business goals.

In this increasingly competitive environment, it will be the managed service providers who can supply these next generation managed service models that will ultimately succeed.

Cost used to be the key driving force behind all outsourcing decisions but operators are becoming increasingly attracted by the opportunity to gain access to sought after technical expertise, possibly not available within their own organisation.

Every MSP needs a skill set encompassing process knowledge, technical
expertise, commercial experience and cost orientation, with technical expertise
now seen as the key differentiator. Process knowledge ensures that
implementation and operational management is carried out in the most efficient
way possible to achieve a cost advantage. Commercial experience ensures
continuity for an operator’s business, pre- and post implementation, and
experience of cost control ensures that a managed service proposition can
create financial advantage for an operator. Managed services liberate the
operator to focus on developing and delivering the services required to
maintain a competitive edge in the highly competitive Indian telecommunications
marketplace.

Interestingly, mobile network operators have accepted managed services as the standard approach to managing roaming traffic for many years, so the concept of reducing overheads and outsourcing certain services to a specialist provider is already widely accepted. Network outsourcing is now an accepted mainstream model for Indian operators, and other managed service processes are also gaining more traction.

Analyst firm Gartner indicates carrier network outsourcing in the Indian market is expected to grow threefold between 2007 and 2014, with applications and operations management representing ~80% of the total value of all services in this space by 2014.

Clearly, cost ceases to be the primary factor in such a trend, while structural and business model issues increasingly influence outsourcing decisions. In the current turbulent and uncertain market, network operators can focus more closely on their core business competencies, making it both logical and sensible to consider a managed service environment. As operators become familiar with managed service models, they are more open to embrace such options, and with the advent of Cloud based information system environments, and SaaS and PaaS approaches, it is likely that enterprise management will evolve towards a more hybrid model.

It is impossible to ignore the benefits of flexibility and user control that today’s managed services offer. In this increasingly competitive environment, operators need to respond to wholesale process pressures and actively manage revenue margins. Why maintain an expensive in-house system when you can enjoy the operational effectiveness, cost efficiency and expertise of a dedicated managed service provider? A managed service proposition based on cost alone is unlikely to appeal to operators for a number of reasons. If cost is a variable it can be reduced whether a process is provided in-house or externally. This means that cost, while still an important part of the equation, is no longer the sole determinant.

Far more interesting for an operator is the combination of cost re-engineering, access to expertise and the opportunity to strategically change investment cycles that MSPs provide. The two critical advantages an operator must receive from an MSP are measurable gains in efficiency and a more effective way of managing an existing business process. While it has already been indicated that KPI adherence alone is not a determinant of a sound managed service relationship, the critical advantages associated with outsourcing do require strict governance demonstrated through well defined service level agreements (SLAs), measurable quality controls and key performance indicators (KPIs).

As the MSP market is defined by scale, it is likely that market consolidation will take place within the MSP sector itself. Each business process area is likely to eventually be served by a handful of large MSPs. It is also inevitable that the largest of these will eventually seek to provide full service capability, providing network outsourcing, IT and OSS/BSS management, clearing services and customer services. This will not occur in the short term, as no single organisation currently has the expertise necessary to provide it, however starting with alliances and eventually through merger and acquisition activity, the concept of the Mega-MSP is likely to emerge.

What is not yet clear is the role the largest network operators themselves may play in this evolution. Large network operators are already providing systems integration and managed service capabilities for their own enterprise customer segments. While the Gartner forecasts mentioned above for carrier network outsourcing indicate substantial growth, this is placed into context when we consider that the same forecast indicates an enterprise network outsourcing market in India worth far more than double the value of the carrier network outsourcing market by 2014, with enterprise network managed services valued at ~US$ 735 million by 2014. The development of Cloud based service propositions give the network operators an interesting opportunity to provide services over a network, possibly managed by a third party MSP. Such models prove the simple truth that everything evolves and nothing is static in the world of managed services.

Raghunatha Chary, vice president Sales, India, MACH

editor@telecomlead.com